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  • Claiming ITC before install is complete?

    hi folks

    can some experts add some light into the details of the ITC rebate?

    im trying to move quick on the install before 2018 ends. One vendor says I can claim the ITC if there is a signed contract and the permitting process has begun...is that true?

    so I don

  • #2
    I am interested as well. I will ask my tax professional also. I have had solar panels installed since December 2017. I have not paid a penny yet. My contract includes the upgrade of my main electrical panel. That is now finally underway and should be complete soon. The solar panel installation has been passed by the building inspector but I cannot get the Permission to Operate until the new electrical panel is installed and approved by the building inspector for the County.

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    • #3
      Originally posted by Ampster View Post
      I am interested as well. I will ask my tax professional also. I have had solar panels installed since December 2017. I have not paid a penny yet. My contract includes the upgrade of my main electrical panel. That is now finally underway and should be complete soon. The solar panel installation has been passed by the building inspector but I cannot get the Permission to Operate until the new electrical panel is installed and approved by the building inspector for the County.
      What's taking so long on the install ?

      IRS instructions for when tax credit can be taken are pretty straight forward. If install was started in 2017 chances are you could have taken any eligible credit last tax year. See IRS instructions for form 5695 if interested.

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      • #4
        Originally posted by J.P.M. View Post

        What's taking so long on the install ?
        ...........
        At first, because of the fires in Sonoma County, the County had such a backlog that the installer had trouble coordinating a meet between PG&E and the County regarding the electrical service panel upgrade. Then, I think the installer dropped the ball. I finally escalated it with installer in October. My service is underground and they have to run a new 3" conduit 20 feet to my meter location. Yesterday they began the first phase of trenching. If weather permits, conduit will be in ground today. Then inspected by PG&E. After that another coordinated meet with County and PG&E to actually install the new service. County has to approve the service panel install. PG&E has to disconnect the old service, Installer sets the new service panel and gets County to sign off. Then PG&E comes back and connects new service.
        The installer gratuitously gave me a $1,000 credit on the contract..I am still not out of pocket. Some how my Inverter was energized and has been providing power to the grid when the sun shines. I am not getting any credit for that generation but often charge my cars and run my heat pump water heater to store some of that energy.
        Last edited by Ampster; 12-05-2018, 01:00 PM.

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        • #5
          Originally posted by Whittier411 View Post
          One vendor says I can claim the ITC if there is a signed contract and the permitting process has begun...is that true?
          No that is not true. you can read the language yourself but it needs to be complete and ready to operate, is the common understanding.
          OutBack FP1 w/ CS6P-250P http://bit.ly/1Sg5VNH

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          • #6
            Just found this article on NOTICE 2018-59 Which says otherwise? As long as project is commenced and or 5% of cost incurred, it can be claimed in that year?
            https://www.google.com/amp/s/www.gre...solar-projects

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            • #7
              Originally posted by ButchDeal View Post

              No that is not true. you can read the language yourself but it needs to be complete and ready to operate, is the common understanding.
              Butch: I'm not an accountant and don't play one on TV, but reading the instructions for form 5695 under "costs", 1st page , lower left: "... costs are treated as being paid when the original installation of the item is completed". They're may be some required separation of fly crap from pepper on this, but I'd suggest that "original installation" would reasonably be considered to be when the physical plant is done and capable of producing power (perhaps/probably) before any permitting or AHJ/etc. inspections/signoffs or paperwork are passed, since the timing of those signoffs is out of the owners' control. If /to the degree that interpretation is correct, the tax credit can be used in the tax year the installation is completed.

              Now, since the OP states that power can or has been produced, accidently or inadvertently or whatever, I'd suggest a reasonable interpretation of the sate of affairs might be that original installation is completed.

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              • #8
                Originally posted by J.P.M. View Post

                Butch: I'm not an accountant and don't play one on TV, but reading the instructions for form 5695 under "costs", 1st page , lower left: "... costs are treated as being paid when the original installation of the item is completed". They're may be some required separation of fly crap from pepper on this, but I'd suggest that "original installation" would reasonably be considered to be when the physical plant is done and capable of producing power (perhaps/probably) before any permitting or AHJ/etc. inspections/signoffs or paperwork are passed, since the timing of those signoffs is out of the owners' control. If /to the degree that interpretation is correct, the tax credit can be used in the tax year the installation is completed.

                Now, since the OP states that power can or has been produced, accidently or inadvertently or whatever, I'd suggest a reasonable interpretation of the sate of affairs might be that original installation is completed.
                yes this is my understanding as well. The system is capable of running but not necisarily licensed or inspected. What we have typically recommended is final electrical inspection as the date, as a failure might result in some more expense.
                OutBack FP1 w/ CS6P-250P http://bit.ly/1Sg5VNH

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                • #9
                  Can you guys elaborate on your interpretation of IRS 2018-59?
                  https://www.irs.gov/pub/irs-drop/n-18-59.pdf

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                  • #10
                    Originally posted by Whittier411 View Post
                    Can you guys elaborate on your interpretation of IRS 2018-59?
                    https://www.irs.gov/pub/irs-drop/n-18-59.pdf
                    I am not offering tax advice here, but I can tell you that I am going to go for the tax credit in 2018, based on the following facts:
                    - My contract was for a Solar installation including a new service panel.
                    - The solar part of the installation was completed in December 2018 and inspected and signed off by the Building Inspector on December 21, 2017.
                    - The system has generated 9.04 megaWatts of power since inception. I have printed out the log from my Solaredge inverter and put it in my tax folder for 2018.
                    - The service panel upgrade was delayed and may be completed by 12/31/18. (the exact date will be known by the time I file)
                    - The final inspection and Permission to Operate from PG&E will be known by the time I file taxes in April.

                    Based on some of the above, I probably could have taken the credit in 2017 but that is water under the bridge. If I get audited for 2018 my pushback will be that I could have taken the credit in 2017. In any case which year I take it might only make a little difference because of rates since my income is similar each year. Your mileage may vary.

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                    • #11
                      Ampster Yes, your situation definitely qualifies you to claim this year! Based on my interpretation.

                      Butch and JPM are still under the impression that the project has to be complete and connected prior claiming ITC?

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                      • #12
                        It may be signed off by County by 12/31, other wise I can always go with the safe harbor rule and pay 5% by 12/31.
                        I will get my CPA opinion in any case but I am confident he will concur. No worries, either, I am not relying on this forum for tax advice so moderators can sleep peacefully tonight.

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                        • #13
                          Originally posted by Whittier411 View Post
                          Can you guys elaborate on your interpretation of IRS 2018-59?
                          https://www.irs.gov/pub/irs-drop/n-18-59.pdf
                          I won't because, as I wrote, I'm not an accountant. However, I've read that notice several times and am of the opinion that it deals mostly with projects begin, not when they are completed. It also seems to be focused on commercial projects to clear up some matters that arose from the 2015 extension of the ITC for alternate energy equipment.

                          Spend a few bucks and see your accountant. You'll get what you pay for around here (or less).

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                          • #14
                            Originally posted by Ampster View Post
                            It may be signed off by County by 12/31, other wise I can always go with the safe harbor rule and pay 5% by 12/31.
                            I will get my CPA opinion in any case but I am confident he will concur. No worries, either, I am not relying on this forum for tax advice so moderators can sleep peacefully tonight.
                            As I'm not a moderator, I plan to reside peacefully in the arms of Morpheus tonight with or without your permission, but thank you for your most kind consideration.

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